Spice Mobiles to own 65% in JV with Malaysia’s CSL

NEW DELHI: B K Modi group firm Spice Mobiles is picking 65% equity in a new joint venture that will own Asian smartphone brand Blueberry, besides the mobile handset and netbook-manufacturing units of Malaysia's CSL Mobile for around $25 million, a top company executive said.

CSL, a privately-held company, which is believed to have annual revenues of $180 million, will transfer its assets to the JV firm in which it would own 35%.

Selangor-based CSL, currently, has two manufacturing plants in China and Taiwan where it makes mobile handsets and netbooks. The products are sold under the company's parent brand CSL, besides Blueberry, which is a cheap smart phone brand.

Spice Mobiles, that currently sells handset in the country under its own brand, is reviewing plans to launch these other brands in India, one of the fastest-growing mobile markets.

The deal is structured through cash payment and stock sale. Spice Mobiles has made an initial investment of $10 million for picking the majority stake and the group will transfer 7.5%, or a third of its shareholding in Singapore Stock Exchange-listed MediaRing, to CSL. As per closing price of MediaRing on Wednesday, the 7.5% stake is valued at $15 million. Spice Mobiles had acquired about 22% in the IT company MediaRing in August last year for about $40 million.

"The JV will help us have a foothold in product design area. Our investment in the JV will go up to $100 million by the fiscal end," Spice Mobiles chairman BK Modi, who will also double up as head of the new JV, told ET. Spice Mobiles scrip rose 0.48% to close at Rs 42.3 at BSE on Wednesday.

The new venture will start operations next month. Eric Chuah, managing director of CSL Mobile, will serve as the vice-chairman of the JV. As part of the deal, the joint venture company will also set up two product development centre as well as manufacturing units, one each in India and Singapore.

CSL also has distribution presence across a few Asian markets and BK Modi Group is considering plans to leverage on it to take its mobile handset retail chain HotSpot outside India. "We are evaluating the option and it is definitely on the cards. We are currently evaluating the branding part of it," Spice Mobiles vice-chairman Dilip Modi said. Spice Mobiles will also use CSL's network to launch its existing products in markets such as Indonesia, Malaysia and Thailand.